British Columbia Securities Commission Grants Carl Icahn’s Cease-Trading Application in Connection with Lions Gate’s Poison Pill
May 5, 2010 | Posted by firstname.lastname@example.org | Topic(s): Cross-Border Deals
, Poison Pills
, Tender Offers
Investor Carl Icahn scored a temporary victory in his hostile bid to take over Lions Gate Entertainment, when the British Columbia Securities Commission (“BCSC”) granted an application to invalidate the Lions Gate poison pill. On April 27, 2010, the BCSC ordered a “cease trading” with respect to the poison pill adopted by Lions Gate’s board on March 11, 2010, just 10 days after the Icahn Group launched its $7 per share tender offer. The BCSC did not explain its decision, but stated that “our reasons will follow.” The Lions Gate’s poison pill would dilute the value of the Icahn Group’s shares in the event the Group’s stake, currently 18%, were to equal or exceed 20% by offering other shareholders additional stock at a discount.
Lions Gate has appealed the BCSC decision to the British Columbia Court of Appeal. Originally set for hearing on May 3, 2010, the Court of Appeal delayed the hearing until May 7, 2010. It is expected that the British Columbia court will rule on the appeal prior to the previously scheduled May 12, 2010 meeting of Lions Gate’s shareholders to vote on the poison pill.
In a press release filed with the SEC, Mr. Icahn stated “I am gratified to see that – consistent with its vision to play a leading role in securities regulation that inspires investor confidence and supports fair, efficient, and innovative Canadian capital markets – the BCSC agreed with our view that Lions Gate shareholders should have the right to decide for themselves whether they wish to sell their shares in our tender offer. We commend the Commission for its thoughtful consideration and resolution of this important issue.”
Risk Metrics Group, a leading proxy advisory firm, has recommended investors oppose the poison pill plan, while competing proxy advisory firms Glass Lewis & Co. and Egan-Jones support the plan.